Bankruptcy's Full Story Will Be Closed to Scrutiny

MICHAEL G. WAGNERTIMES STAFF WRITER

Orange County will get more than $400 million from Merrill Lynch & Co. to settle the bankruptcy case, but what its citizens may never get is the full story.

Detailed in literally millions of records, company documents, internal memos and depositions--what lawyers call the "discovery" in civil cases--is the explanation by executives of Merrill Lynch of their firm's role in America's largest municipal bankruptcy. But protective orders agreed to by lawyers for the county and Merrill shortly after the county filed its lawsuit, call for the destruction or return of all discovery materials 180 days after a settlement is approved by the court.

If the records are destroyed, lost to history will be the story of Merrill super salesman Michael G. Stamenson, the man who sold former Treasurer Robert L. Citron most of the risky securities.

The public will also miss knowing what triggered the internal fight at Merrill between risk managers who opposed selling any more exotic securities and the sales staff who couldn't sell enough.

The county's lawyers said Tuesday the settlement agreement did not affect the protective orders now in place.

One of the county's lawyers, J. Michael Hennigan, said the county does not oppose the release .

Costa Mesa attorney David Wiechert, who represented Citron, said he and Citron have advocated for full disclosure of the bankruptcy's criminal and civil record from the beginning.

"It's pretty clear to me what Bob was doing and thinking between 1991 and 1994 when he bought all those derivative [securities] from Merrill, but what Merrill was doing and thinking I don't have a clear picture," Wiechert said.

After Orange County Dist. Atty. Mike Capizzi agreed to accept $30 million from Merrill to end his criminal investigation in May 1997, area news organizations including The Times obtained an order for the release of Orange County Grand Jury testimony. Merrill appealed. A decision by the 4th District Court of Appeal is expected by mid-July.